Amazon swallows UK online bookseller

The world of online book retailing is about to get that little bit less competitive, with Amazon announcing that it’s reached agreement to buy UK seller The Book Depository.

Perhaps recognizing the importance of the brand, the 900-pound gorilla has faithfully promised that it’s not going to squash The Book Depository brand. Customer disquiet has also led The Book Depository to reassure people that it will continue to operate independently.

That independence, users hope, will include maintaining its free delivery to 100 countries and its “long tail” approach of resurrecting out-of-print titles under its Dodo Press imprint.

However, with Amazon’s margins under pressure – the company has warned its margin could fall to below 3 percent of sales in the current quarter – it’s almost certain to bring a magnifying glass to anything in The Book Depository’s business model that looks like over-servicing its customers.

There’s no word yet on whether the UK’s the Office of Fair Trading is likely to raise any competition concerns.

That competition impact will stretch far beyond the US and UK. While data isn’t available for individual territories, Amazon and The Book Depository stand as practically the only international online bookseller brands of note in countries like Australia. In many countries, the merger will create an effective monopoly.

In the Australian market, administrators for collapsed private equity company REDgroup, which bought and gutted the Angus & Robertson and Borders retail chains before collapsing earlier this year, have sold the company’s online business to the Australian arm of Penguin’s owner Pearson.

When REDgroup sunk under the weight of excessive debt and a long program of customer alienation, pundits in Australia pointed the finger at Amazon and The Book Depository for eating the local retailer’s lunch. Under a single business, the twin international giants will present an even more formidable challenge to localized retailers. ®